Opinion
NO. 01-18-00506-CV
08-01-2019
MICHAEL FRANCIS PALMA, Appellant v. HARRIS COUNTY APPRAISAL REVIEW BOARD, Appellee
On Appeal from the 157th District Court Harris County, Texas
Trial Court Case No. 2018-17668
MEMORANDUM OPINION
In this case arising out of a property tax dispute, Michael Palma, the beneficiary of a trust that owned real property in Harris County, Texas, filed a petition for review against the Harris County Appraisal Review Board (the Board), challenging the Board's determination of his protest for the 2017 tax year. The Board filed a plea to the jurisdiction, arguing that it was not a proper party to the suit and that Palma should have sued the Harris County Appraisal District (HCAD) instead. Palma sought leave to amend his petition for review, arguing that he misstated the sections of the Texas Tax Code that formed the basis for his petition, but he did not seek to name HCAD as a party to the suit. The trial court granted the Board's plea to the jurisdiction, denied Palma's motion for leave to amend, and dismissed Palma's suit against the Board with prejudice. On appeal, Palma argues that he had the right to amend his petition for review and that the trial court's failure to allow amendment of his petition violated his due process rights.
We affirm.
Background
The 6205 Trust owns residential real property located on Autumn Forest Drive in Houston, Texas, and it holds this property in trust for the benefit of Palma. In 2017, HCAD appraised the market value of this property at $165,019. Palma, as he had done in 2015 and 2016, filed a written notice of protest of the appraised value of the property and sought a hearing before the Board. The written notice of protest included a space for Palma to state the reason for his protest. Palma stated: "Tax Code 41.41(a)(3) and 41.42." See TEX. TAX CODE ANN. § 41.41(a)(3) (providing that property owner is entitled to protest "inclusion of the owner's property on the appraisal records" before appraisal review board); id. § 41.42 (providing that property owner may protest inclusion of owner's property on appraisal records on basis that property does not have taxable situs in appraisal district).
In protesting his property taxes for the 2015 tax year, Palma argued that the property did not have situs in Harris County and, therefore, HCAD lacked the authority to appraise it. See Palma v. Harris Cty. Appraisal Dist., No. 01-17-00502-CV, 2018 WL 1473792, at *1 (Tex. App.—Houston [1st Dist.] Mar. 27, 2018, pet. denied) (mem. op.) ("Palma I"). HCAD moved for summary judgment, arguing that it had established that the property was taxable and that it was physically located in Harris County and, thus, had a taxable situs in Harris County, and the trial court agreed. Id. A panel of this Court held that HCAD's summary judgment evidence proved as a matter of law that the property had situs in Harris County and could be appraised by HCAD, and the panel affirmed the trial court's summary judgment ruling. Id. at *2-3. In protesting his property taxes for the 2016 tax year, Palma argued that the property did not have situs in Harris County and that the Board failed to hold a "taxable situs hearing" as required by the Texas Tax Code. See Palma v. Harris Cty. Appraisal Review Bd., No. 01-17-00705-CV, 2018 WL 3355052, at *1 (Tex. App.—Houston [1st Dist.] July 10, 2018, pet. denied) (mem. op.) ("Palma II"), cert. denied, — S. Ct. —, 2019 WL 1828279 (June 24, 2019). The Board filed a plea to the jurisdiction, arguing that Palma did not file a timely notice of situs protest and that Palma was not entitled to such a hearing, and the trial court granted the Board's plea to the jurisdiction. Id. at *2. A panel of this Court held that Palma did not adequately brief his argument that he was entitled to a situs hearing and, therefore, this issue was waived. Id. In affirming the trial court's order granting the Board's plea to the jurisdiction, the panel also cited to Palma I and noted that this Court had held "that the property in question is real property located in Harris County and thus appraisable by HCAD." Id.
On November 20, 2017, the Board sent Palma two notices informing him that he had hearings scheduled before the Board on December 12, 2017. The first notice stated that "[t]his particular hearing will consider the issues raised in the written protest: determination of the situs of the property." The second notice stated that "[t]his particular hearing will consider the issues raised in the written protest: market value of the property and related matters." The appellate record does not include a record of what occurred at the hearings before the Board.
On January 16, 2018, the Board issued a written "Order Determining Protest." In this order, the Board lowered the appraised market value of Palma's property from $165,019 to $164,900 and ordered that the appraisal records be changed accordingly. Also on January 16, 2018, the Board issued an order on Palma's challenge to the situs of his property, stating that the Board determined that the appraisal roll should not be changed and that Palma's property would continue to be taxed in jurisdictions including the City of Houston, Houston Independent School District, Harris County, and related Harris County taxing units. Both orders informed Palma of his right to file a petition for review of the Board's orders in the district court.
Palma timely filed a petition for review with the Harris County district court on March 16, 2018. His petition named the Board as the sole defendant. Palma alleged:
1. On December 12, 2017 for tax year 2017 the Defendant implemented a situs and value hearing on the plaintiff['s] property.Palma attached the January 16, 2018 order determining protest as an exhibit to his petition.
2. On Jan[uary] 16, 2018 for tax year 2017 the Defendant received the Order[]s Determining Protest[]s as attached.
3. I am hereby challenging the defendant[']s determination that the plaintiff['s] property is "located in this state" or has "situs" within the 60 day deadline as stated in Tex. Tax Code §42.21(a).
The Board filed a plea to the jurisdiction, arguing that Palma had not complied with Tax Code section 42.21, which governs petitions for review of appraisal review board orders. The Board acknowledged that Palma had the right to petition the district court for review of its orders determining Palma's situs and valuation protests, but it argued that Tax Code section 42.21 provides that Palma's petition for review must be brought against the appraisal district, not against the appraisal review board, and that section also provides that an appraisal review board may obtain dismissal from a petition for review filed against it. The Board therefore requested that the trial court dismiss with prejudice Palma's petition filed against it.
Palma responded to the Board's plea to the jurisdiction and acknowledged that he "quoted the wrong chapter of the Texas Tax Code." He referred to his written notice of protest of the initial appraised value of his property which "clearly indicates that plaintiff is requesting hearings [before the Board] under Tex. Tax Code §§41.41(a)(3) (inclusion of the owner's property on the appraisal records: jurisdictional) and 41.42 (situs)." He requested that the trial court allow him to amend his petition for review to correct the section of the Tax Code under which he brought his protest and filed his petition for review, and he also requested that the trial court deny the Board's plea to the jurisdiction.
Palma filed a "Motion to Amend Original Pleadings" that was substantively identical to his response to the Board's plea to the jurisdiction. In this motion, he again stated that he mistakenly referenced an incorrect section of the Tax Code as the basis for his petition. In his prayer for relief, Palma stated:
As stated above it is evident that petitioner incorrectly stated the section of code upon which to make his petition valid and requests that this court grant plaintiff's prayer to amend the code section upon which the petition was filed. In the interest of justice Plaintiff respectfully requests that this court grant the amending of the original petition from Tex. Tax Code §42.21(a) to Tex. Tax Code Subchapter C of Chapter 41 and §25.25 and deny defendant's plea to the jurisdiction in this respect.Palma did not address the Board's argument that the trial court lacked subject-matter jurisdiction because Palma incorrectly sued the Board rather than HCAD. Palma also did not file an amended petition for review.
The trial court granted the Board's plea to the jurisdiction and dismissed Palma's claims against the Board with prejudice. The trial court also denied Palma's motion for leave to amend his petition. This appeal followed.
Denial of Motion to Amend Petition
On appeal, Palma argues that the trial court erred by denying his motion for leave to amend his petition for review to correct the section of the Tax Code under which he brought his property tax protest and subsequent petition for review. Palma also argues that, by failing to allow him to amend his petition for review, the trial court violated his due process rights. A. Standard of Review and Governing Law
Each county in Texas has an appraisal district, and the district is "responsible for appraising property in the district for ad valorem tax purposes of each taxing unit that imposes ad valorem taxes on property in the district." TEX. TAX CODE ANN. § 6.01(a)-(b); see id. § 1.04(12) (defining "taxing unit" as including county, incorporated city, school district, special district or authority, or "any other political unit of this state" that is "authorized to impose and is imposing ad valorem taxes on property"). Each appraisal district has an appraisal review board. Id. § 6.41(a). The duties of an appraisal review board include determining property tax protests initiated by property owners, determining challenges initiated by taxing units, correcting clerical errors in the appraisal records and appraisal rolls, and determining whether property tax exemptions have been improperly granted. See id. § 41.01(a).
Texas Tax Code section 41.41 provides that a property owner is entitled to protest to an appraisal review board several actions, including the determination of the appraised value of the owner's property and the inclusion of the owner's property on the appraisal records. Id. § 41.41(a); see also id. § 41.42 ("A protest against the inclusion of property on the appraisal records for an appraisal district on the ground that the property does not have a taxable situs in that district shall be determined in favor of the protesting party if he establishes that the property is subject to appraisal by another district or that the property is not taxable in this state."); id. § 21.01 (providing that real property is taxable by taxing unit if it is located in taxing unit on January 1 of relevant tax year). If the property owner timely files a written notice of protest with the appraisal review board, the owner is entitled to a hearing and determination of the protest. Id. § 41.44(a) (setting out when property owner must file written notice of protest). A property owner initiating a tax protest is entitled to appear to offer evidence and argument, and the property owner may offer evidence or argument by affidavit without personally appearing before the appraisal review board. Id. § 41.45(b).
The appraisal review board shall determine a property owner's protest and make its decision by written order. Id. § 41.47(a). If the board determines that the appraisal records are incorrect in some respect, the board by its order "shall correct the appraisal records by changing the appraised value placed on the protesting property owner's property or by making the other changes in the appraisal records that are necessary to conform the records to the requirements of law." Id. § 41.47(b). The board shall deliver a notice of issuance of the order to the property owner, and this notice "must contain a prominently printed statement in upper-case bold lettering informing the property owner in clear and concise language of the property owner's right to appeal the board's decision to district court." Id. § 41.47(d)-(e).
A property owner is entitled to appeal to the district court an order of the appraisal review board determining a protest by the property owner pursuant to Tax Code Chapter 41. Id. § 42.01(a)(1)(A). A property owner who appeals a decision of the appraisal review board as provided by Tax Code Chapter 42 must file a petition for review with the district court within sixty days after the owner received notice that the board had issued a final order. Id. § 42.21(a). Failure to timely file a petition for review bars an appeal under Chapter 42. Id. Section 42.21(b) provides:
A petition for review brought under Section 42.02 [by the chief appraiser] must be brought against the owner of the property involved in the appeal. A petition for review brought under Section 42.031 [by a taxing unit] must be brought against the appraisal district and against the owner of the property involved in the appeal. A petition for review brought under Section 42.01(a)(2) or 42.03 [concerning apportionment among counties of appraised value of railroad rolling stock] must be brought against the comptroller. Any other petition for review under this chapter must be brought against the appraisal district. A petition for review may not be brought against the appraisal review board. An appraisal district may hire an attorney that represents the district to represent the appraisal review board established for the district to file an answer and obtain a dismissal of a suit filed against the appraisal review board in violation of this subsection.Id. § 42.21(b) (emphasis added); Appraisal Review Bd. v. Int'l Church of Foursquare Gospel, 719 S.W.2d 160, 160 (Tex. 1986) (per curiam) (stating that "[c]ompliance with § 42.21 is jurisdictional" and holding that failure of party petitioning for review of appraisal review board order to name appraisal district as defendant deprived trial court of jurisdiction over case). A petition for review that is timely filed under section 42.21(a) may be amended to "correct or change the name of a party." TEX. TAX CODE ANN. § 42.21(e)(1).
Parties may amend their pleadings "as they may desire by filing such pleas with the clerk at such time as not to operate as a surprise to the opposite party." TEX. R. CIV. P. 63 (providing, in addition, that any pleading offered for filing within seven days of trial date shall be filed only after party obtains leave of court, which "shall be granted by the judge unless there is a showing that such filing will operate as a surprise to the opposite party"). We review a trial court's ruling denying a party leave to amend his petition for an abuse of discretion. Witkowski v. Brian, Fooshee & Yonge Props., 181 S.W.3d 824, 833 (Tex. App.—Austin 2005, no pet.). B. Analysis
Here, Palma was not satisfied with his 2017 property taxes and he filed a written protest of two matters—valuation of his property and situs of his property—with the Harris County Appraisal Review Board. The Board held hearings on these matters on December 12, 2017. On January 16, 2018, the Board issued two orders determining Palma's protests. With respect to Palma's valuation protest, the Board lowered the appraised value of Palma's property from $165,019 to $164,900. With respect to Palma's situs protest, the Board concluded that the appraisal rolls would not be changed and that Palma's property would continue to be taxed by Harris County jurisdictions.
On appeal, Palma argues that "it appears that two value hearings were conducted when never requested and the §41.41(a)(3) hearing [concerning situs] never occurred." The appellate record, however, reflects that the Board sent two notices of hearing to Palma: one concerning the valuation hearing, and one concerning the situs of the property. The Board subsequently issued two separate orders determining Palma's protest: one concerning valuation, and one concerning situs. Moreover, Palma acknowledged in his petition for review that the Board conducted a "situs and value hearing" on December 12, 2017.
Palma timely filed a petition for review with the district court on March 16, 2018. In his petition, he stated that he wished to challenge the Board's determination that his property "is 'located in this state' or has 'situs.'" Palma named the Board as the sole defendant in his petition for review; he did not name or serve HCAD.
The Board filed a plea to the jurisdiction, arguing that Palma's suit against it was required to be dismissed under Tax Code section 42.21(b), which provides that certain petitions for review, including petitions such as Palma's, must be brought against the appraisal district—here, HCAD—and not the appraisal review board, and that the Board was entitled to seek dismissal of Palma's suit against it.
Under the plain language of section 42.21(b), which provides that petitions for review like Palma's "must be brought against the appraisal district" and "may not be brought against the appraisal review board," the Board was entitled to dismissal of Palma's suit against it. See TEX. TAX CODE ANN. § 42.21(b); Int'l Church of Foursquare Gospel, 719 S.W.2d at 160 (holding that compliance with section 42.21(b) is "jurisdictional" and that failure of property owner filing petition for review to name appraisal district as defendant—rather than appraisal review board—deprived trial court of jurisdiction over case). The trial court therefore properly dismissed Palma's claims against the Board.
Section 42.21(e) provides a mechanism for amending a petition for review. Under that section, a party who timely filed a petition for review under section 42.21(a) may amend his petition to "correct or change the name of a party." TEX. TAX CODE ANN. § 42.21(e)(1). Here, in response to the Board's plea to the jurisdiction, Palma filed a motion for leave to amend his petition. In his motion, however, he argued that his original petition for review incorrectly indicated that he was seeking review of the Board's order under Tax Code section 42.21(a), but he should have indicated that he was seeking review under Tax Code Chapter 41—including sections 41.41(a)(3) and 41.42—and Tax Code section 25.25. He stated:
Tax Code section 25.25 allows for changes to the appraisal rolls to be made in certain limited circumstances, such as when clerical errors occur, when property is appraised multiple times in a single tax year, or when property is included on the appraisal roll that "does not exist in the form or at the location described in the appraisal roll." See TEX. TAX CODE ANN. § 25.25(c).
As stated above it is evident that petitioner incorrectly stated the section of code upon which to make his petition valid and requests that this court grant plaintiff's prayer to amend the code section upon which the petition was filed. In the interest of justice Plaintiff respectfully requests that this court grant the amending of the original petition from Tex. Tax Code §42.21(a) to Tex. Tax Code Subchapter C of Chapter 41 and §25.25 and deny defendant's plea to the jurisdiction in this respect.Palma did not address the Board's argument that he sued the wrong defendant, nor did he seek to substitute HCAD as a defendant in this motion. Palma did not file an amended petition naming HCAD as a defendant.
Although Palma sought leave from the trial court to amend his petition for review, the amendment that he sought—changing the reference to section 42.21(a) to Chapter 41 and section 25.25—would not cure the jurisdictional defect in this case, which was naming the wrong party as a defendant. See Tex. A&M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007) ("As is the case with special exceptions, a pleader must be given an opportunity to amend in response to a plea to the jurisdiction only if it is possible to cure the pleading defect."); Tara Partners, Ltd. v. City of South Houston, 282 S.W.3d 564, 570 (Tex. App.—Houston [14th Dist.] 2009, pet. denied) (stating that when pleadings do not affirmatively demonstrate incurable defects in jurisdiction, issue is one of pleading sufficiency and plaintiff should be afforded opportunity to amend, but "through inaction, a plaintiff may lose the opportunity to amend"); see also Harris Cty. v. Sykes, 136 S.W.3d 635, 639 (Tex. 2004) ("If a plaintiff has been provided a reasonable opportunity to amend after a governmental entity files its plea to the jurisdiction, and the plaintiff's amended pleading still does not allege facts that would constitute a waiver of immunity, then the trial court should dismiss the plaintiff's action."). Under the circumstances of this case, in which it was possible to cure the pleading defect but the amendment that Palma sought would not have done so, we hold that the trial court did not abuse its discretion by denying Palma's motion for leave to amend his petition for review.
We overrule Palma's issues on appeal.
Conclusion
We affirm the judgment of the trial court granting the Board's plea to the jurisdiction. All pending motions are dismissed as moot.
Evelyn V. Keyes
Justice Panel consists of Justices Keyes, Kelly, and Goodman.